Arthur Goldstuck, MD of technology research and consulting company World Wide Worx, announced the findings for his 2002 South African e-commerce report at ITWeb`s Brainstorm e-business conference session at Gallagher Estate today.
While the report showed that local online retail generated R162 million in 2001, showing almost 100% year-on-year growth, Goldstuck pointed out that the growth came off a small base.
Moreover, online retail accounted for only 0.1% of the country`s R188 billion total annual retail market.
By comparison, in the US, online retail made up 1.0% of total retail, 10 times more than in SA.
The only two sites that were willing to disclose their revenue figures were local online bookstore, Kalahari.Net, which generated R17 million for the 2001 year, while the ShoppingMatrix reported R15.5 million.
Goldstuck said online retailers` reluctance to part with their figures is not really that surprising, and it may be embarrassment, rather competitive strategy that kept the e-tailers mum.
Books, magazines and stationery were the most successful products sold online during 2001. Music was the second most popular purchase, with sports and recreational equipment coming third. Food and beverages were the fourth most shopped commodities, but Goldstuck said this is a prime example of there being no correlation between how much money is spent on marketing and return on investment.
Pointing to sites such as Woolworths` In the Bag and Pick 'n Pay`s HomeShopping, Goldstuck commented that it is not surprising that consumers shop on the sites fairly often, considering the enormous amounts of money the companies spend to market the online stores.
Goldstuck made special mention of wine merchant, Cybercellar, which he said is performing well, both locally and internationally. "[Cybercellar] is teaching everyone else what personal service is all about."
On a sombre note, Goldstuck pointed to the number of e-tailers no longer in business. The online retail industry lost 40 participants during the year under review, equating to 35% of the market, but he said this should not be seen as failure of the concept in the country.
Goldstuck ended with a warning to businesses not to view online retail as separate entity: "Online retail will become a part of the fabric of retail business. Online retail is an extension of a business, not a separate business. It does not replace a business, just as the Internet does not replace the physical world."
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